Strong Dollar May Muscle its Way Through 2017

January 14, 2016 10:32 AM

The USDA-ERSS is predicting that the strong U.S. dollar will flex its muscles at a slower rate this year but still maintain a slow strengthening pattern through 2017 before turning toward a gentle decline.

Grain marketer Ted Seifried explains how this can negatively affect U.S. grain markets.

“For one, it creates a more difficult situation for U.S. exports,” he says. “As the U.S. dollar gains strength compared to other currencies, it makes U.S. products more expensive. This comes at a time when the global grain market is very competitive already. It [also] creates a competitive advantage on imports to the U.S., and in extreme cases, cheap foreign grain could help keep a lid on U.S. prices.”

The U.S. dollar is not the only determining factor for grain prices, but it has held a noticeable influence in recent years, Seifried says.

“We’ll need to keep an eye on it,” he says.”


USDA-ERS exchange-rate projections through 2025 predict the dollar will gain strength at a slower pace in 2016 and 2017, then trend lower (again at a slow pace) from 2018 through 2025. This exchange rate is determined my measuring the dollar’s value against 79 foreign countries, weighted by share of U.S. ag exports.

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